02 December 2013
Muscat: The global demand for Islamic pension funds is currently between $160 billion and $190 billion, according to estimates by Ernst & Young's (E&Y) Global Islamic Banking Center. At present, most of these funds are parked under conventional sovereign pension funds due to lack of investment options.
Growing market
"Several fast-growth emerging markets including Malaysia, Saudi Arabia and UAE are seeing strong demand for retirement plans that are Sharia-compliant. With the maturity of the sukuk market and Sharia-compliant equity indices, as well as technology available to screen conventional indices to carve out Islamic sub-indices, there appears to be sufficient assets available for many of the pension funds to take the first step towards Sharia-compliant propositions," said Ashar Nazim, Parner of E&Y.
A key decision is whether to allow members of the fund to transfer their existing account balance to the Sharia-compliant fund, or if only the future contributions should be segregated as conventional or Islamic. Additionally, timing for the desired transfer is important. The fund would model the outcomes based on several factors.
Muscat: The global demand for Islamic pension funds is currently between $160 billion and $190 billion, according to estimates by Ernst & Young's (E&Y) Global Islamic Banking Center. At present, most of these funds are parked under conventional sovereign pension funds due to lack of investment options.
Growing market
"Several fast-growth emerging markets including Malaysia, Saudi Arabia and UAE are seeing strong demand for retirement plans that are Sharia-compliant. With the maturity of the sukuk market and Sharia-compliant equity indices, as well as technology available to screen conventional indices to carve out Islamic sub-indices, there appears to be sufficient assets available for many of the pension funds to take the first step towards Sharia-compliant propositions," said Ashar Nazim, Parner of E&Y.
A key decision is whether to allow members of the fund to transfer their existing account balance to the Sharia-compliant fund, or if only the future contributions should be segregated as conventional or Islamic. Additionally, timing for the desired transfer is important. The fund would model the outcomes based on several factors.
© Times of Oman 2013
